Tuesday, June 01, 2010

Fraud Discovery Issues Investigative Report Rebutting Congressman Anthony Weiner's Allegations Against Glenn Beck Show Advertiser Goldline

NY Congressman Anthony Weiner
Updated at 7:22 PM Eastern

Fraud Discovery Institute co-founder Barry Minkow released a 120 page open letter (including exhibits) to Securities and Exchange Commission Chairperson Mary Schapiro and Federal Trade Commission Chairman Jon Leibowitz, detailing a point by point rebuttal of every single allegation contained in New York Congressman Anthony Weiner's recent report alleging fraud, misrepresentation, and improper marketing practices by Goldline Inc., a frequent advertiser on the Fox News Glenn Beck show and other conservative talk shows. Please download and read Minkow's open letter here and Weiner's report here.

Congressman Anthony Weiner had called for the SEC and FTC to investigate certain alleged "shady practices" conducted by Goldline. However, Minkow called Congressman Weiner's allegations against Goldline "unfounded and politically motivated."

Minkow accused Weiner of trying to instigate a baseless investigation of Goldline in order to punish them for being the biggest advertiser for Glenn Beck, an outspoken political foe. In other words, Congressman Anthony Weiner is trying to cut-off advertising support for a program that presents points of views that he disagrees with, as evidenced by Barry Minkow's detailed rebuttal of Weiner's allegations against Goldline. 

Note: Convicted felon turned fraud buster Barry Minkow (co-founder of Fraud Discovery) has uncovered over $1.8 billion of fraud involving over twenty companies and has received an official commendation from the FBI for his work in uncovering crime. Minkow and I are close personal friends. I did research work for Fraud Discovery Institute in helping it refute certain allegations contained in Congressman Weiner's report. In the past, I have done research work for Fraud Discovery on certain other companies such as InterOil (NYSE: IOC) and Medifast's (NYSE: MED) former auditors. Additional disclosure is provided at the bottom of this blog post.

Barry Minkow's open letter distanced himself from the political issues dividing conservative talk show host Glenn Beck and liberal Congressman Anthony Weiner. Instead, Minkow focused on rebutting each and every one of Weiner's allegations against Goldline.

In addition, Barry Minkow raised troubling issues of possible abuse of power and an apparent assault on the First Amendment by Congressman Weiner. Minkow compared Congressman Weiner's efforts to punish Goldline with similar efforts by certain public companies to silence their critics, too.

Acclaimed forensic accountant and author Tracy Coenen, who also helped Minkow in the investigation, noted in her blog that:
What did we find about Goldline International? It’s not the fraud. The people investigating on behalf of Weiner are the real frauds, providing only part of the story in their report to the SEC and FTC, apparently in order to make the company look bad (and therefore fulfill Weiner’s political agenda).
Coenen provided a summary detailing Fraud Discovery's rebuttals of Congressman Weiner's allegations against Goldline:
Allegation: Weiner criticizes Goldline because of complaints on the website Ripoff Report lodged by consumers who say Goldline representatives improperly hold themselves out as investment advisors.

What Weiner didn’t tell you: Ripoff Report says (in response to the consumer complaints) that you can feel completely confident doing business with Goldline. Weiner gave us only half of the story in his report.

Allegation: Goldline grossly overcharges for its products

What Weiner didn’t tell you: Our sampling of coins listed in the Weiner report showed that Goldline’s prices were very comparable to those of six competitors. He also forgot to mention that companies are free to set whatever prices they like for their products.

Allegation: Goldline says they’ll buy back your gold and silver, but doesn’t “guarantee” that

What Weiner didn’t tell you: It is against the law for Goldline to offer a buyback guarantee. If they offered such a guarantee, they would be in violation of securities laws because their salespeople are not licensed broker dealers.

Allegation: Goldline salespeople misrepresent themselves and imply that they are investment advisors, which would mean they have a fiduciary duty to those buying from them.

What Weiner didn’t tell you: In the Risk Disclosure section of Goldline’s website, it very clearly states “Goldline’s employees are not licensed as investment advisors and are not authorized to recommend the purchase or sale of any product or investment other than the products specifically sold by Goldline.”

Allegation: Goldline has “hidden fees” for things like storage of your gold, mailing your gold to you, and selling your gold.

What Weiner didn’t tell you: The fees charged by Goldline are anything but hidden. The Goldline website has at least 5 statements about the fees and how they’re calculated

Allegation: Goldline confuses customers regarding the buyback of their gold.

What Weiner didn’t tell you: Goldline clearly states that it will buy back gold at their current bid/purchase price. The words “bid” and “purchase” price have a clear meaning and are not in any way confusing.
In the video below, Barry Minkow explains Fraud Discovery's investigation of Congressman Weiner's allegations against Goldline.:



Fraud Discovery's press release explains the reasons for Barry Minkow's open letter:
“We don’t have a political agenda at the Fraud Discovery Institute,” said co-founder Barry Minkow. “But we can’t stand by while a public servant—a U.S. congressman, no less—unfairly bashes a company that happens to be the biggest advertisers of a political foe, Glenn Beck. It’s a transparent attempt to silence a major critic, and it’s an abuse of his office and an assault on the First Amendment.”

Despite Goldline’s 50-year history (and some truly shadowy businesses in the gold-coin industry, the Weiner Report singled it out for using “conservative rhetoric, high pressure sales tactics and tall tales about the future of gold to sell over priced coins that can be bought somewhere else for cheaper.”

In its investigation, FDI refuted point by point, each allegation against Goldline made in the Weiner Report. This defense is not because of any special affinity to Goldline, Glenn Beck or other conservative commentators. It’s simply because FDI has also been a victim of similar tactics—in its case, unfounded allegations have been lodged with the SEC by public companies that want to silence FDI’s well-documented criticisms of their business.

Glenn Beck
“This is a disturbing new trends—to use the SEC to silence critics,” Minkow said. “At a time where government officials should be investigating fraudulent companies, they are having to spend their time investigating critics. It’s all backward.” 
Barry Minkow was referring to efforts by certain public companies such as Usana (NYSE: USNA), Medifast (NYSE: MED), and Lennar (NYSE: LEN) to stop him from issuing critical reports about them by filing lawsuits and complaining to the SEC. Minkow has publicly disclosed holding a short position in those companies.

In 2008, Fraud Discovery and Minkow won an Anti-Slapp motion filed against Usana and they were awarded legal fees to reimburse them for defending against that company's frivolous lawsuit. Similar Anti-Slapp motions are pending against Medifast (Details here and here).

Another short seller David Einhorn, faced an SEC investigation that was instigated Allied Capital, because of his criticism of that company. In his Portfolio.com column, Gary Weiss describes Einhorn's painful ordeal:
The tale begins in 2002, when Einhorn started bringing to the SEC credible evidence of asset overvaluation at Allied. Instead of investigating Allied, the SEC was jiu-jitsued by the company into an unwarranted investigation of Einhorn, without a shred of evidence that he had done anything wrong. The probe swiftly showed he was innocent, but only after he went to considerable trouble and expense. When the SEC finally did deign to probe Allied, it was grotesquely disorganized, with the Enforcement Division unaware that the Office of Compliance Inspections and Examinations was also investigating the company.

The SEC approached Allied with all the enthusiasm of a patient undergoing a root canal. Nobody from the SEC even bothered to visit Allied’s offices during the OCIE’s 18-month investigation, even though it was located just a few blocks away. All the while, Allied was lobbying ferociously to make the whole thing go away, and it pretty much got its way.

In 2007, the SEC agreed to a settlement with Allied that was less than a wrist slap. No penalties were imposed on the company or any of its officers, even though Allied admitted that one of its factotums had engaged in “pretexting” to get Einhorn’s phone records (though Allied denied authorizing the pretexting). And then, poof! When Kotz commenced his probe in 2009, all of the work papers from the OCIE examination were “inexplicably deleted” from a computer drive shared by various OCIE officials. An unidentified official testified that the files were probably deliberately zapped.
Even though I did research work for Fraud Discovery in helping it rebut Anthony Weiner's allegations against Goldline, I am not a Glenn Beck fan. In fact, during 2007, I respectfully turned down Beck for an interview because of a competing invitation by CNBC.

While I have testified as an expert witness on corruption for the New Jersey Republican Policy Committee in New Jersey, I am a registered life-long Democrat. I view crime as a non-partisan issue as evidenced by my appearances on diverse networks such as CNBC, Fox News, National Progressive Radio, Russia Today, National Public Radio, and many others.

The issue here is Anthony Weiner's inaccurate and misleading allegations against Goldline, his apparent abuse of power by trying to instigate a baseless investigation of Goldline, and his assault on the First Amendment by unfairly attacking Goldline because they are sponsor to certain political programs hosted by people like Glenn Beck and others who do not share his political views.

This is not a Democrat versus Republic issue or a liberal versus a conservative issue. It is an issue concerning every person's fundamental right to free speech guaranteed under the US Constitution, without having to face retaliation by the government or shady companies for their views.

Written by:

Sam E. Antar

Recommended Reading and important disclosure below:

June 1, 2010: Going Concern - Barry Minkow Isn’t Buying Anthony Weiner’s Report That Says Goldline International Is More or Less a Fraud by Caleb Newquist

Excerpt below:
Regardless of how you feel about Glenn Beck, gold coins, or Anthony Weiner’s Fox News-esque ability for interrupting, it kinda sorta sounds like the Congressman’s investigators don’t know a non-fraud when they see one. Besides, we’ll take the word of a convicted-felon-turned-fraud-buster over any report that comes out of Congress. Especially in an election year.

June 1, 2010: Red State - Fraud Discovery Institute Rebuts Congressman’s Charges against Glenn Beck Sponsor

Excerpt below:
This is notable for several reasons. For one thing, FDI’s usual modus operandi is uncovering corporate fraud, rather than defending corporations against charges of fraud, which makes their doing the latter here all the more significant. Furthermore, as Antar himself states in his blog entry on the report, he is a lifelong Democrat and as such no fan of Glenn Beck, yet he is here nevertheless willing to call out a congressman from his own party for making a false, politically-motivated accusation
June 1, 2010: CFO Magazine - Something Wicked This Way Comes by Maria Leone

Excerpt of interview:
Antar says. Criminals "don't go down without a fight, they don't fight fairly, and they are going to intimidate whistle-blowers — that's the nature of their game." To fight back, companies may need to raise the level of their own game, or say goodbye to losses that the ACFE says typically equal 5% of company revenue.

Disclosure:

I am a convicted felon and a former CPA. As the criminal CFO of Crazy Eddie, I helped Eddie Antar and other members of his family mastermind one of the largest securities frauds uncovered during the 1980's. I committed my crimes in cold-blood for fun and profit, and simply because I could.

If it weren't for the efforts of the FBI, SEC, Postal Inspector's Office, US Attorney's Office, and class action plaintiff's lawyers who investigated, prosecuted, and sued me, I would still be the criminal CFO of Crazy Eddie today.

There is a saying, "It takes one to know one." Today, I work very closely with the FBI, IRS, SEC, Justice Department, and other federal and state law enforcement agencies in training them to identify and catch white-collar criminals.

Recently, I exposed financial reporting violations by Overstock.com (NASDAQ: OSTK) as an independent whistleblower. The Securities and Exchange Commission is investigating Overstock.com and its CEO Patrick Byrne for securities law violations (Details here, here, and here).

I do not own Overstock.com securities long or short. My exposure of financial reporting violations by Overstock.com was a freebie to securities regulators to get me into heaven, though I doubt that I will ever there.

While I did research work for Fraud Discovery on InterOil and Medifast's former auditors, I do not own their shares, long or short.

I do not seek or want forgiveness for my vicious crimes from my victims. I plan on frying in hell with other white-collar criminals for a very long time. If Congressman Anthony Weiner keeps up his assault on the First Amendment, he may end up joining me in hell, too.

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